My device is updated but asking to update the device

If your iOS is 14.7.1, first quit Outlook app and restart your iPhone, failing that try removing and re-installing Outlook, then contact Microsoft Support.

Close an app on your iPhone or iPod touch - Apple Support

Restart your iPhone - Apple Support

If you’re on an iPhone 6 or earlier, you’re headed for a hardware replacement with a newer (used, refurb) iPhone, or a newer iPhone, as older iPhone models cannot run iOS 13 or iOS 14. There are no hardware upgrades available.

The current iOS version is 14.7.1.

The current Microsoft Outlook application version is 4.2135.0.

And, if you subscribe to Office 365, that subscription must be kept current.

Check all the above items.